In the Money market which of the following statement’s is/are incorrect? 1. The call money market deals in short-term finance repayable on demand, with a maturity period varying from one day to 14 days. 2. Treasury bills are instruments of short-term borrowing by the Government of India, issued as promissory notes under discount. 3. A reduction in the repo rate helps banks to get money at a cheaper rate. 4. Money market mutual funds invest money in specifically, high-quality and very short maturity based money market instruments.

[amp_mcq option1=”1 and 3″ option2=”2 only” option3=”4 only” option4=”None of the above” correct=”option2″]

The correct answer is: B. 2 only

Option 1 is correct. The call money market is a market for short-term loans, typically with maturities of one day to fourteen days. The loans are made between banks and other financial institutions, and they are used to meet short-term liquidity needs.

Option 2 is incorrect. Treasury bills are short-term debt obligations issued by the government. They are considered to be very safe investments, and they are used to finance the government’s day-to-day operations. Treasury bills are issued at a discount, and they mature at face value.

Option 3 is correct. A reduction in the repo rate makes it cheaper for banks to borrow money from the Reserve Bank of India. This can lead to lower interest rates for borrowers, and it can also stimulate economic activity.

Option 4 is correct. Money market mutual funds are a type of mutual fund that invests in short-term money market instruments. These instruments include Treasury bills, commercial paper, and certificates of deposit. Money market mutual funds are a safe and liquid investment, and they are a good option for investors who are looking for a place to park their money for a short period of time.